“While we’ve all started to feel like the European crisis is over, there are clearly many aspects of it that can easily reappear,” O’Neill, 55, said Thursday in a Bloomberg Radio interview with Carol Massar. The corruption allegation in Spain isn’t “just noise, it’s news,” and the re-emergence of Berlusconi, the former premier who vowed to undo some policies of successor Mario Monti, wasn’t anticipated, O’Neill said.

Political events may weigh on perceptions of the euro, O’Neill said. Investors should sell Italian bonds before the election later this month as Berlusconi’s resurgence may push 10-year yields to 5 percent, analysts at Royal Bank of Scotland Group Plc said Wednesday in a note. Rajoy’s effort to rebut graft allegations adds to the risk of holding Spanish government debt, Andrew Bosomworth, a managing director at Pacific Investment Management Co., said earlier this week.

The European Central Bank today left interest rates unchanged at a record low of 0.75 percent. The euro’s gains could thwart a recovery by curbing exports and pushing inflation too low.

“It’s certainly become very fashionable to be super bullish on the euro,” said O’Neill, who’s retiring this year as chairman of Goldman Sachs’s asset-management division. “But I’m not sure it’s so smart now.”

The euro weakened 0.9 percent to $1.3398 at 3:39 p.m. in New York, after touching a 14-month high last week.

O’Neill formed the BRIC investing strategy, binding Brazil to Russia, India and China, following the Sept. 11 terrorist attacks to reflect the waning influence of the U.S. on the world’s economy. The theory became central to Goldman Sachs’s economic outlook.

In Thursday’s interview, O’Neill described China’s ability to control a housing bubble and its shift to a more consumer-focused economy as “really impressive.”

“It’s pretty clear that the Chinese leadership is very good at worrying about all the things that everybody else worries about, but faster and quicker than we do,” he said. “They stopped the housing bubble, I’ve never seen that happen in a big country ever in my career.”

O’Neill, who’s based in London, said he plans to take time to think about what he’ll do after retiring and that he doesn’t know whether he would consider entering politics.